February 2015 is (already!) here. I feel relief looking at a fresh month. The last few were exhausting. I battled various work emergencies. I felt guilty about some Christmas/travel related overspending (outrageously priced airport food). I was bummed spending money on necessary but expensive things: renter’s insurance and car registration. What did the end of January bring?

A net improvement of ~$1,000. Tight!

Going forward, I’m thinking I can increase my net worth by ~$800 each month just based on debt repayment and PERA (retirement) contributions. Then there’s the additional ~$600 of discretionary income that can be put to use…

Details on how January went down:

CASH – My emergency fund is complete! I just transferred $500 into savings bringing the total balance to $3,000. I usually keep ~$2,000 in checking. $5,000 is a nice round number that should be sufficient for most emergency situations I’d find myself in.

ROTH IRA – Slight decrease but no big deal.

TRAD IRA – Same.

CIVIC VALUE – I’m interested to see if my depreciation prediction holds true. I think this car is going to lose value slowly. Just for fun, I checked my model again but with 20,000 more miles. Value = $8,605. Sounds reasonable, since a Civic 2 years older with 90,000 miles is worth ~$8,000.

PERA – Mandatory contributions running on autopilot. In this pension plan, my contributions are 100% mine and they earn 3% fixed. If I pay in for enough months, I’ll collect a retirement benefit in my 60s

PLUS LOAN – Refinance is in progress! I’ll post soon detailing: why I chose to refinance when conventional wisdom says government loans are better than private, the bank I chose, and how the process went.

STAFFORD LOAN – I have these on a payment plan that results in the lowest monthly payment since the interest rates are mostly low. ~$25,000 is at 4.2% or less. I’ll apply any extra payments to the 6.8% loans.

CIVIC LOAN – I constantly flip flop when it comes to my car – I’d love to free up the monthly payment but I also like making rational math based decisions. At 2.94%, there’s little reason to pay extra. Other than the nice warm feeling of not having a car payment…

PERKINS LOAN – The student loan I’m always forgetting I have! This sucker has a 9 month deferment period after graduation compared to most student loans which provide 6 months. My first payment is due in less than month. I might try to kill this one soon just to get rid of another monthly bill.

You wouldn’t think so would you? We hear constant doomsday tales that the world is about to end because of the 6 figure student loan debt every 20-something is carrying around. It’s simply impossible to graduate college in the United States without a trail of loans following. Right?

Those numbers are not nearly the horror show the media pretends they represent. The average is only $30,000, or the price of a brand new loaded Honda Accord. The average also is just that: an average. If I owe $200,000 for my degree and you owe $15,000, our average is $107,500. You can see how extreme borrowers distort the statistic.

Moving on to the median, which I think is a much more useful metric, we see even more good news. Half of students owe less than $8,500. That’s freakin’ amazing!

Finally, those with with the oft-whined about six-figure debt load only register 4% of borrowers.

The investment in an undergrad education has never been more worth it. Median weekly earnings for those holding a bachelor’s reached $1,108 in 2013. Median earnings for those with a high school diploma? $651. An education in skilled labor (the trades) also has a high return on investment, given the relatively low cost of training.

For those with high levels of student loan debt, repayment plans are generous. Federal loans currently allow you to choose between the following plans:

Standard repayment

Graduated repayment

Income based

Pay-as-you-earn

Income contingent

Income sensitive

Extended*

Extended graduated*

If your income is low enough, a few of these plans can result in a payment due of $0.

These flexible plans are what allowed me to borrow the ridiculous sum of $70,000, yet have minimum payments of $475 with protection if I should lose my job. That amount is ~17% of my take-home income and I wish I had borrowed less.

The point is that I borrowed the money. I got the education I wanted, a fancy undergrad lifestyle filled with my own apartment, weekend drinking binges, and a study abroad trip to Europe. Those things cost money.

There is no student loan crisis. Most students are not borrowing extreme amounts. Most graduates are receiving an income boost that makes the return on investment extremely lucrative.

CIVIC – Hey, a (random) increase! I think I’ve hit the point where depreciation will be much slower.

PLUS – Small decrease due to a regular monthly payment. However, I have some exciting plans for this loan that I’ll share later this month.

STAFFORD – Good: I found out my job qualifies for public service loan forgiveness. Bad: I’m limited to government or non-profit employers for 10 years. Worse: The forgiven amount would only be ~$5,000.

CIVIC LOAN – Due to my master plan for the PLUS loan, I may be able to pay this off in 2015!

December 2014 Breakdown

CASH – Moving across the country was expensive, but I’ve been able to keep my cash reserves up. I’d like to have $2,000 in checking to handle regular monthly bills and $5,000 in savings to handle any emergencies. All other income should be invested or pay down debt.

ROTH – I debate constantly whether I should contribute something to this every month. But then I think “No, you need to pay down your student loans!”

PLUS – Just entered repayment! My first scheduled payment is December 12th. This is my first priority to get rid of and I finally can now that my moving expenses are done.

STAFFORD – Just entered repayment on this as well! Already made the first scheduled payment. I chose the graduated standard repayment plan so my payments stay as low as possible. I can pay more on the PLUS this way.

CIVIC LOAN – Hate having this loan hang out. Reminds me I spent too much on a car. But the loan itself is extremely cheap at 2.9%. I’d love to pay it off by the end of summer 15 but I think I’d love seeing the PLUS balance fall more.

PERKINS - Grace period lasts 9 months.

Progress is still slow, but I’ve settled my new city and gotten used to the expenses that come along with living by yourself. Now I’m ready to kill this debt!

I’m 2.5 years late, but I’m finally sharing some pictures from my study abroad semester in Torino, Italy. I was lucky to have 4 day weekends so I got to travel to other major European cities. I still frequently look back at this time in my life. I met incredible people and had some amazing experiences. Here’s a taste:

Turin, Italy

Gelato stop the on the first day of classes. The shop was right beneath my apartment and I saw the owner, Johnny, almost everyday. This was taken with a friend’s iPhone when Instagram was “some app I found”.

View of my apartment. We were all told to adjust our expectations on living arrangements. Mainly that our apartments would be smaller than what we were used to. But mine was plenty big for my roommate and I. There’s a separate bedroom through the door by the fridge.

Olympic Arch constructed for the 2006 Winter Olympics. Located behind the Lingotto Mall (formerly a Fiat factory), just a few blocks from my apartment building.

Italian Riveria

View of the Mediterranean Sea from my hotel room. We went on this field trip just a few weeks after arriving in Turin. This is when I realized I had made an awesome decision.

One of the best friends I made! Discovered we actually grew up only an hour away from each other. We were slightly tipsy at this point.

We were waiting for the bus to come for the Cinque Terre trip and wanted a bite to eat. We saw a waiter walk by with this drink and knew we had to try one. It was amazing sangria and honestly this thing was like a breakfast snack. Loaded with fresh oranges, strawberries, and other fruit.

London, England

Cool brick I saw near Abbey Road. Something about the handwriting caught my eye. Best part of travel is when stuff like this pops up.

Paris, France

We took a short boat cruise that went past the Eiffel Tower. Very cheap if I remember correctly and of course we had a few beers while the tour guide gave us info on the sights.

View from the 2nd (or 3rd?) platform on the Eiffel Tower. Advice: take the stairs if you’re able. You’ll save money and you can go your own pace.

Hamburg, Germany

Doing the flight to Hamburg right! Good thing I was relaxed because I had a 45 minute layover at Charles de Gaulle airport. Not enough time!

My German friend studied at my high school and we became good friends. I asked if I could come visit for a few days. He said “Sure!” and I got to see Hamburg from a native’s perspective.

Amsterdam, Netherlands

Amsterdam had a much smaller feel than I expected. Very fun vibe though.

Rome, Italy

Rome was probably my favorite trip. Not sure I could have ended the semester any better. Had a blast exploring the city, taking too many tequila shots, and biking through busy streets.

Enjoying a casual walk through the Colosseum. I took 3 years of Latin in high school, so seeing this in real life was awesome.

Rome close to Christmas is incredible and you can’t beat this group of people for a good time.

***

That semester had a big effect on my life. I had never left the United States before or traveled by myself. I learned a lot about independence, different cultures, and what I really valued. This is when I started to shift from wanting a high paying job after graduation, a fancy house & car, and all the other things we tell ourselves are evidence we’ve made it. Instead, I really just want time and enough frequent flyer miles to explore.

I have an account in collections for a medical bill from over 2 years ago.

I know what you’re thinking. How could you BE so irresponsible? Pay your bills asshole!

First we have to rewind all the way back to May 2012. I woke up one morning and felt terrible. Fatigued, low fever, and pain in my lower stomach. I laid in bed checking out WebMD for several agonizing hours – which confirmed I was suffering from 20 different illnesses and diseases. The pain became so severe I drove to the hospital. Not the safest decision looking back.

When I got there, I realized I didn’t have my health insurance card. No big deal, right? My mom arrived; someone instructed her to call the next day to provide insurance info.

I had my appendix removed and went home the next day. The story should end there, but of course it doesn’t.

In February 2014, a woman called and claimed I owed an anesthesia provider $1,500. I told her I didn’t because A) I never got a bill and B) I have really good insurance. She explained that because the hospital didn’t get my insurance info when I first arrived, they never sent it to the provider. WTF.

The provider finally wrote it off as bad debt and now it belongs to a collection agency.

I received a scary looking letter in the beginning of May that (in all capital letters lol) said if payment was not received by May 31st, the account would be reported to the credit bureaus. May came and went and nothing was reported. I received an identical letter in June, but the date was changed to June 30th. Still nothing reported right now, but I’m thinking they’re going to follow through anytime.

The idiot at the collection agency has spent hours of her life telling me how hard the anesthesia provider tried to get in contact with me. Sent 3 letters. To the wrong address. Obviously those were returned. They had my cellphone number. Never called. She tried to be a hard ass and claim they have the original admission records and they contacted me according to the information I provided*. Just for shits and gigs, I ordered those records. They had my mom and dad’s phone numbers as well.

***

Two weeks ago I sent a debt validation letter.Certified mail, return receipt requested. Cost me like 6 bucks. Debt validation is when you send a letter that asks the collection agency to prove you owe the debt. This is the first step in the dispute process.

Think about it. If a stranger came up to on the street and said, “Hey, you owe me $2,000 for a medical/credit card/electric bill from 2012.” You’d laugh in their face right? You’d want some proof before you starting writing checks.

A debt validation letter can get you that proof. If they don’t have it or won’t provide it, you’ll have an easier time telling them to piss off.

I see this going down 1 of 3 ways:

#1 My letters and previous phone conversation convince them they won’t receive any money and they forget I exist.

#2 They report to the credit bureaus. My only real play if this happens is to dispute it with the bureaus. I’ve read that the bureaus will cave if you send enough paperwork. I could eventually negotiate a pay-for-delete with the collection agency. Just need to write a letter saying I’ll pay you X if you agree to remove all records of this account.

My credit score would drop ~100 points. No need to panic, I’ll still have a ~650. I have no plans to buy a home or finance a car, so a bad credit score would be manageable. The iffy part is renting an apartment. Most landlords probably don’t care about an old medical debt. But it could scare away some.

#3 Same as scenario 2, but they actually sue me to collect. F that. Court would be an interesting experience but not one I’d like to have.

A week has gone by since the latest deadline and still no damage done to my credit. That’s a good sign! My letter must have worked or they’re gearing up to bring out the big guns.

*Except I didn’t provide the wrong information. My dad was standing right next to me as I rattled off my address.

July 2014 Breakdown

CASH – Continuing to save for a 2 week Denver job hunt. If I come up empty handed, I’ll regroup @ home and have enough cash to pay my bills for few months until I land something. I’m aiming to have $5,000-$10,000 before moving out.

ROTH – I know my account changes don’t look very drastic – just $24 from last month until now. But if I had started with 10K, it would have grown to $10,300. Investing won’t feel significant until you get into the 5 and 6 digit range. Once there though, you could be up or down thousands of dollars over the course of 1 day!

OPERS – Transfer just completed today. This is now a traditional IRA at Vanguard.

CIVIC – Love how slowly the Civic is losing value. I did a quick search and 2004 Civics are selling for ~$6,000. If that holds for my 2010, I’ll be in great shape in 2020. She’ll still have a reasonable value and roughly 120,000 miles. That’s practically brand new for a Civic!

PLUS – Seeing the ~$300 monthly interest accumulate stresses me out. Don’t like this at all. I’m so tempted to throw 2K at this but I’m trying to hold off for 2 months while I job hunt.

STAFFORD – The interest difference between this loan and the PLUS makes me sad.

CIVIC LOAN – Want to pay this down just to get rid of it, but I’m holding out until I get my work/living situation figured out. I know I should just let it ride at 2.94% but…car loans are bad!

PERKINS - Grace period lasts 9 months.

Finally! After a couple months of questionable progress, I made some headway and actually increased my net worth. Now I need to be patient while I job search. The debt will start melting away soon enough.

I’ve been done with school for 2 months now. I’m still working at my internship, after turning down a permanent offer, until I find the job I want. I have 6 months before I have to stop working. Tick-tock!

I make plenty of money to cover my low expenses. But I’m well aware that I have to move on. The sooner the better; I’m making 10K-20K less than what I expect to earn in a post-grad job.

The question is where. I probably won’t get a job in my immediate area. Tech isn’t a big industry here. I would be more likely to get a job in Dayton or Columbus. I’ve given a lot of thought to moving to Denver too because of the better job market, nicer weather, and to see a new part of the country.

If I work in Dayton or Columbus, I can live at home for free and rapidly pay down my student loans. Parts of Dayton wouldn’t be too bad, around 40 minutes. Columbus is 60 at a minimum. F that. I’d pay my student loans down quicker, but at the cost of losing more time and and using up my car’s lifespan.

I doubt commuting all the way to Columbus works for more than a few months. I’d save up some money and move out. I have other things I want to do besides work and drive to work like: blog, train for a marathon, read, etc. I can’t realistically consider this an option.

Looking at rent prices, I’ll be paying almost the same regardless of where I live. The differences are whether I have roommates, studio vs. 1 bedroom, newer building, etc. I’m fine with living in a small cramped old studio in Denver if that’s what it takes. When I think about this, I lean towards Denver or Columbus. I have no desire to live in Dayton.

The math makes me reverse my decision. Estimating my income and expenses, I would pay ALL my loans off in 2018 if I continue to live at home and 2024 if I move. To achieve my 2020 goal of eliminating student loans, I’d have to earn more money in Denver or Columbus at some point. I’m optimistic I’ll receive raises and earn some side hustle income but there’s no guarantee.

I’m stuck deciding if being debt free is worth sacrificing having my own place and a less car oriented lifestyle. Finally, I’m not sure it’s fair for me to continue living at home for free when I could afford to move out but choose not to.

My plan (as I write this haha) is to visit Denver in a few weeks and stay with a friend. Try to interview and get a job offer. If the offer is decent, I think I’m going to take it. I’ll move, crush it at my job, and do something to earn extra income in pursuit of that 2020 debt free goal. I’d love to hear if anybody out there has advice or a different perspective I haven’t considered!

After months of procrastinating and paying too many $4.00 monthly account fees, I finally did something about the retirement account I had with an old employer. It’s one of those things I knew needed to be done, but never prioritized. Given how often we switch jobs now (I think the latest count is around 8), this is something we should all get used to doing.

When you have a typical retirement account – 401k, 403b, 457, or TSP (if you’re a fed) – you have a few options when you leave your employer:

Forge about it. The money is still yours, you just leave it with your old company’s account provider. It’ll stay invested however you chose and chill. A lot of retirement plans have expensive investment options though so those fees will continue to be charged*. You risk losing track of the account over time as you move through your career.

Rollover. You move the funds from your employer’s provider to a traditional individual retirement plan. You can pick any provider you want for this. Etrade, Fidelity, Charles Schwab, Vanguard, etc. I would go with Vanguard since they have the lowest fees in the industry but Schwab and Fidelity have good options too.

Cash that baby out. Take your money and run! You can request a check to liquidate your account. You’ll pay regular income taxes and a 10% penalty fee because you’re not 59 1/2. Take whatever amount you think you’re getting and subtract about 20-35%. You might want to cash out. I’ve done the research for you and figured out the correct course of action:

“My account balance will let me buy a new car. Right now I’m driving a used car. Should I cash out?”

NO.

“I’ve been dying to go on a vacation. It’ll only cost 10K. That won’t go very far in retirement anyway**. Should I cash out?”

NO.

“Kohl’s and Target are having a sale on the SAME DAY!! Should I cash out?”

NO.

You may cash out if doing so would prevent death or bodily harm and you have no other source of funds. But max out your credit cards first. Your 401k is protected in bankruptcy so don’t give up that sweet benefit.

Given the current fee situation and craziness of a cash out, I initiated the rollover of my old employer’s retirement plan to a traditional IRA at Vanguard. I’m investing in the 2055 target date fund – the same fund I chose in my Roth IRA. I operate on a set-it-and-forget-it investing philosophy.

*Does not apply to the Thrift Savings Plan. The TSP is a crazy sweet account with extremely inexpensive funds.

PLUS – Anxious to get a new job, move, and start paying this sucker off.

STAFFORD – Typical interest accrual. I’ll be putting this loan on whichever plan results in the lowest payment. This will free up cash to pay down the higher interest PLUS loan.

CIVIC LOAN – Slowly but surely. Toying with the idea of paying this off quickly when I start my new job. The interest rate is under 3%, but I’m thinking the motivation factor would be huge and I would have the cash to throw at my student loan. But if something came up, I could use that cash as a kind of emergency fund.

PERKINS - Grace period lasts 9 months so it’s on the back burner until then.

I’m in limbo. I’m back working full-time and my expenses are minimal for now. Aiming to have a job in Denver by the end of July and will then start killing my debt and building up some assets.

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